Exhibit 10.20
ASSET PURCHASE AGREEMENT
BETWEEN
MECHANICAL TECHNOLOGY INCORPORATED
(A New York Corporation)
AND
▇▇▇▇▇▇ MACHINE COMPANY
(an Illinois Corporation)
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is entered into between
▇▇▇▇▇▇ Machine Company, an Illinois corporation (the "Purchaser"),and Mechanical
Technology Incorporated, a New York corporation ("Seller"). This Agreement is
entered into as of this 22nd day of September, 1997. The ▇▇▇▇ of Sale, the
Assignment and Assumption of Contracts, the Assignment of Intellectual Property
Rights, the $400,000 Promissory Note, the $250,000 Promissory Note and the
Security Agreement, are all dated as of the 30th day of September, 1997 (the
"Transactional Documents").
In consideration of the foregoing and the mutual representations, warranties,
covenants, and agreements contained in this Agreement, Purchaser and Seller
hereby agree as follows:
1. Sale of Assets.
1.1 Sale of Assets. Subject to the terms and conditions of this Agreement,
on the Closing Date, Seller hereby assigns, transfers, and delivers to the
Purchaser all of the assets and properties of the Business, owned, leased or
held by Seller (other than the excluded assets as set forth on Schedule 1.1
hereof ("Excluded Assets")), as the same shall exist on the Closing Date,
including all assets and property shown on the Contributed Balance Sheet (and
not disposed of in the ordinary course of business) and all assets and property
thereafter acquired by Seller in respect of or necessary for the conduct of the
Business immediately prior to the Closing Date (collectively, the "Assets"),
free and clear of all Liens, except Permitted Liens.
1.2 Purchase of Assets. Subject to the terms and conditions of this
Agreement, Purchaser hereby agrees to pay Seller, in exchange for the Assets,
a total purchase price of three million two hundred and fifty thousand dollars
($3,250,000.00), unless the Net Tangible Assets of the L.A.B. Division of Seller
is less than $650,000, in which case the purchase price shall be reduced by the
amount by which $650,000 exceeds the Net Tangible Assets (the "Purchase Price").
Such Purchase Price shall be payable as follows: a) three hundred and fifty
thousand dollars ($350,000) shall be payable by wire transfer into an escrow
account with the law firm of ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, pursuant to the terms
of the Escrow Agreement, between the parties and ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇,
attached hereto as exhibit A; b) two million two hundred and fifty thousand
dollars ($2,250,000.00) shall be payable in cash, by wire transfer or by
certified check, in full, at the Closing, unless the Purchase Price is adjusted
as set forth above, in which case the cash portion of the Purchase Price shall
be reduced as needed; b) four hundred thousand dollars shall be payable pursuant
to a promissory note, payable in equal monthly installments of principal and
interest over a period of five years commencing as of the Closing Date, at ten
percent (10%) simple interest per annum, with no penalty for pre-payment, which
note shall be secured by a blanket lien on all of the assets of Purchaser,
subordinate to the lien of Old Kent Bank securing the one million, eight hundred
and fifty thousand dollar ($1,850,000) indebtedness of Purchaser to Old Kent
Bank; and c) two hundred fifty thousand
dollars ($250,000) shall be payable pursuant to a promissory note, payable in
one balloon payment of principal and interest at the end of one year, the
principal amount of this note shall be reduced if (i) all of the furniture,
fixtures and equipment of the Business are offered for sale and sold in a
private sale to a purchaser other than Purchaser, Subsidiary or any subsidiary
or affiliate of Purchaser, or at public auction (the "Sale"), and (ii) the
proceeds of such Sale does not exceed five hundred thousand dollars ($500,000),
in which case the principal amount due on the note shall be reduced by the
product of .5 multiplied by (five hundred thousand dollars ($500,000) minus
the proceeds of such Sale) (the "Net Principal"); such note shall bear interest
on the lesser of $250,000 or the Net Principal (if applicable), at ten percent
(10%) simple interest per annum, commencing as of the Closing Date, with no
penalty for pre-payment, such note shall also be secured by a blanket lien on
all of the assets of Purchaser, subordinate to the lien of Old Kent Bank
securing the one million, eight hundred and fifty thousand dollar ($1,850,000)
indebtedness of Purchaser to Old Kent Bank.
1.3 Assumed Liabilities. Subject to the terms and conditions of this
Agreement, the Purchaser assumes and agrees to pay, discharge, or fulfill any
and all liabilities and obligations of Seller (including but not limited to
contingent liabilities) concerning the Business, other than Excluded Liabilities
(the "Assumed Liabilities").
1.4 Excluded Liabilities. The Purchaser shall not assume any liabilities,
obligations or commitments of Seller a) concerning products liability for any
product Completed prior to the Closing Date; or b) other than as set forth in
section 1.7 of this Agreement, any liability of Seller for any employee-related
actions, claims, suits or proceedings (the "Excluded Liabilities").
1.5 Duty to Defend. The Purchaser shall pay all defense costs with respect
to any actions, claims, suits or proceedings by any and all LAB employees
against Purchaser accruing as of or after the Closing Date or related to the
transactions contemplated by this Agreement. Notwithstanding the foregoing,
Purchaser retains the right, in its sole and absolute discretion, to retain its
own counsel with respect to any such matters. Purchaser's defense of Seller
shall not be construed as an indemnification or hold harmless of Seller with
respect to any underlying liability.
1.6 Consent of Third Parties. Notwithstanding anything to the contrary in
this Agreement, this Agreement shall not constitute an agreement to assign or
transfer any Governmental Approval, instrument, contract, lease, permit or other
agreement or arrangement or any claim, right or benefit arising thereunder or
resulting therefrom if an assignment or transfer without the consent of a third
party would constitute a breach or violation thereof or affect adversely the
rights of the Purchaser or Seller thereunder and any transfer or assignment to
the Purchaser or Seller of any interest under any such instrument, contract,
lease, permit or other agreement or arrangement which requires the consent of
a third party shall be made subject to such consent or approval being obtained.
In the event any such consent or approval is not obtained on or prior to the
Closing Date, Seller shall continue to use all efforts to obtain any such
approval or consent after the Closing Date until such time as such consent or
approval has been obtained, and Seller will cooperate with the Purchaser in any
lawful and economically feasible arrangement to provide that the Purchaser shall
receive the interest of Seller in the benefits under any such instrument,
contract, lease or permit or other agreement or arrangement.
1.7 LAB Employees. Seller agrees to use its best efforts to retain all of
the current employees of the Business until the Closing Date. Purchaser shall
hire all of the current employees of the Business as of the Closing Date for a
period of not less than thirty (30) calendar days after the Closing Date. All
such employees are currently, and shall be hired by Purchaser, as employees at
will. Purchaser shall make available to such employees benefits that approximate
those provided to existing employees of Purchaser, however, Purchaser shall not
assume any liability for continuation of any employee benefit plan instituted
or carried out by Seller (other than payment of accrued vacation and as set
forth in Section 1.5 hereof). Purchaser shall not, for a period of one calendar
year, commencing as of the Closing Date, hire any employee of the Business
terminated by Seller during the period August 29, 1997 through ten days after
the Closing Date.
1.8 Guarantee of Aged Accounts Receivable. Seller shall, as of the Closing
Date, guarantee the payment of all accounts receivable that are ninety (90) days
past due as of the Closing Date (as set forth on schedule 1.8 to this Agreement)
("Guaranteed Accounts"), provided however, that Purchaser shall have no right to
enforce this guarantee until Purchaser has used its best efforts, in accordance
with Purchaser's ordinary collections practices, to collect upon all such
Guaranteed Accounts, and such Guaranteed Account is at least one hundred and
twenty (120) days past due. Upon payment of the guarantee as contemplated by
this section, Purchaser agrees to a) permit Seller to collect upon any
uncollected Guaranteed Accounts, b) to subrogate any and all rights Purchaser
may have with respect to any such Guaranteed Accounts, to the rights of Seller,
and c) to pay over to Seller any payment received on such Guaranteed Accounts
within ten days of the receipt of such payment.
2. Events Occurring on the Closing Date
2.1 Closing. The Initial Payment and Transactional Documents shall be
delivered into escrow pursuant to the terms of the Escrow Agreement, as of the
date hereof, to be held and ultimately released in accordance with the terms of
the Escrow Agreement. The remaining Purchase Price shall be paid as of September
30, 1997 (the "Closing Date"). The closing shall take place in Skaneateles, New
York, or at such other location as the parties shall mutually agree.
2.2 Deliveries by Seller. As of the Closing Date, Seller shall deliver to
the Purchaser the following:
(a) The ▇▇▇▇ of Sale, the Assignment and Assumption of Contracts, the
Assignment and Assumption of Lease, and the Assignment of Intellectual Property
Rights (the "Conveyance Instruments");
(b) A copy of the resolutions of Seller's directors, certified by its
Secretary or other authorized party, authorizing or ratifying the execution and
delivery of this Agreement, the Conveyance Instruments, and the other
Transactional Documents, and the consummation of the transactions contemplated
hereby and thereby;
(c) A certificate from the Secretary of State of New York as to Seller's
good standing in such state certified as of a date within thirty (30) days of
the Closing Date;
(d) A Financial Statement, certified as accurate by the Chief Financial
Officer of Seller, confirming the amount of Net Tangible Assets of the L.A.B.
division of Seller;
(e) An opinion, from Seller's counsel, in form and substance satisfactory
to Purchaser and Purchaser's counsel;
(f) All other previously undelivered items required to be delivered by
Seller at or prior to the Closing Date pursuant to the terms of this Agreement,
the Conveyance Instruments or the Transactional Documents.
2.3 Deliveries by the Purchaser.
(a) Cash, wire transfer or certified check payable (or any combination
thereof) to the Seller for $2,600,000.00 (or such amount as adjusted pursuant
to Section 1.2 hereof);
(b) Duly executed copies of the $400,000 Promissory Note, the $250,000
Promissory Note and the Security Agreement (the "Notes");
(c) Duly executed copies of every other Transactional Document to which the
Purchaser is a party;
(d) A copy of the resolutions of Purchaser's directors, certified by its
Secretary or other authorized party, authorizing or ratifying the execution and
delivery of this Agreement, the Notes, and the other Transactional Documents,
and the consummation of the transactions contemplated hereby and thereby;
(e) A certificate from the Secretary of State of Illinois as to Purchaser's
good standing in such state certified as of a date within thirty (30) days of
the Closing Date;
(f) A certificate from the Secretary of State of Illinois as to L.A.B.
Equipment Inc.'s good standing in such state certified as of a date within
thirty (30) days of the Closing date;
(g) An opinion, from Purchaser's counsel,in form and substance satisfactory
to Seller and Seller's counsel;
(h) All other previously undelivered items required to be delivered by
Purchaser at or prior to the Closing Date pursuant to the terms of this
Agreement, the Notes or the Transactional Documents.
3. Representations and Warranties.
3.1 Representations and Warranties of Seller. Seller represents and warrants
to Purchaser as follows:
(a) Authorization, etc. Seller has the corporate power and authority to
execute and deliver this Agreement and each of the Conveyance Instruments and
Transactional Documents to which it is a party and to fully perform its
obligations and consummate the transactions contemplated thereby. The execution
and delivery by Seller of this Agreement, the Conveyance Instruments and the
Transactional Documents and the consummation of the transactions contemplated
thereby, have been duly authorized by all requisite corporate action. This
Agreement, together with all other obligations of Seller hereunder, constitutes
the valid and legally binding obligation of Seller, enforceable in accordance
with its terms.
(b) Corporate Status. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York with full
corporate power and authority to carry on the Business in the places where such
Business is conducted.
(c) No Conflicts. The execution, delivery and performance by Seller of
this Agreement and the consummation of the transactions contemplated hereby,
do not conflict with or result in a violation of or a default under (i) any
Applicable Law applicable to the Business or any of the Assets, (ii) the
certificate of incorporation and bylaws of Seller or (iii) except as set forth
in Schedule 3.1(c) any Contract or other contract, agreement or other instrument
to which Seller is a party and by which Seller or any properties or assets of
the Business are bound. Except as specified in Schedule 3.1(c), no Governmental
Approval or other Consent is required to be obtained or made by Seller in
connection with the execution and delivery of this Agreement, the Conveyance
Instruments or the Transactional Documents or the consummation of the
transactions contemplated thereby.
(d) Financial Statements. Seller has delivered to Purchaser a pro forma
balance sheet for the Business as of August 31, 1997 (the "Preliminary
Contributed Balance Sheet"), a copy of which is attached as Schedule 3.1(d),
which fairly represents the financial condition of the Business as of the date
thereof. Within twenty (20) business days after the Closing Date, Seller will
deliver to Purchaser a balance sheet for the Business as of the Closing Date
(the "Contributed Balance Sheet"); (the Preliminary Contributed Balance Sheet
and the Contributed Balance Sheet are the "Financial Statements").
(e) Taxes. Seller has duly and timely filed all tax returns affecting
the Business with respect to taxes required to be filed on or before the Closing
Date. Except for taxes set forth on Schedule 3.1(e), which are being contested
in good faith and by appropriate proceedings, all taxes have been duly and
timely paid. All taxes required to be withheld by or on behalf of Seller in
connection with amounts paid or owing to any employee, independent contractor,
creditor or other party with respect to the Business have been withheld, and
such withheld taxes have been duly and timely paid to the proper Governmental
Authorities or set aside in accounts for such purpose.
(f) Absence of Changes. Since August 22, 1997, Seller has conducted the
Business only in the ordinary course consistent with prior practice and no
material adverse change (other than the announcement of this Transaction, and
any adverse consequences related directly thereto, including but not limited to
the potential walk out of all or some of the employees of the Business) has
occurred in the Business since August 22, 1997.
(g) Contracts. Attached hereto as Schedule 3.1(h) is a true and complete
schedule of the material contracts of the Business as of the date hereof. Each
contract is in full force and effect and Seller is in compliance with the terms
thereof.
(h) Leases. Attached hereto as Schedule 3.1(i) is a true and complete
schedule of the leases of the Business as of the Date hereof. Each lease is in
full force and effect and Seller is in compliance with the terms thereof.
(i) Litigation. To the best of Seller's knowledge, after due inquiry,
there is no action, claim, demand, suit, proceeding, arbitration, grievance,
citation, summons, subpoena, inquiry or investigation of any nature, including,
but not limited to products liability, civil, criminal, regulatory or otherwise,
in law or in equity pending or threatened against Seller relating to the Assets,
the Business or the transactions contemplated by this Agreement.
(j) Insurance. Schedule 3.1(h) contains a complete and correct list of all
insurance policies maintained by Seller for the benefit of the Assets or the
Business. Such policies are in full force and effect, and all premiums due
thereon have been paid. Seller has complied in all material respects with the
terms and provisions of such policies. The insurance coverage provided by
such policies is adequate and customary for the Business. Seller agrees to
maintain products liability coverage with respect to the products of the
Business Completed as of the Closing Date for a period of five (5) years.
(k) No Material Omissions or Misstatements. To the best of Seller's
knowledge, after due inquiry, there are no material misstatements or omissions
of material fact in connection with the Letter of Intent executed by Seller
and Purchaser, this Agreement or any of the transactions contemplated hereby
or thereby.
(l) Employees. Seller is an employer at will and has no employment
contracts with any employee of the Business. Seller is a non-union shop and
has no union contracts or agreement. There have been no material changes in the
compensation of the employees of the Business since August 29, 1997.
(m) Bring Down. All of the representations and warranties of Seller are
made as of the date of this Agreement, and as of the Closing Date.
3.2 Representations and Warranties of Purchaser. Purchaser represents and
warrants to Seller as follows:
(a) Authorization, etc. Purchaser has the corporate power and authority to
execute and deliver this Agreement and each of the Notes and Transactional
Documents to which it is a party and to fully perform its obligations and
consummate the transactions contemplated thereby. The execution and delivery
by Purchaser of this Agreement, the Notes and the Transactional Documents and
the consummation of the transactions contemplated thereby, have been duly
authorized by all requisite corporate action. This Agreement, together with
all other obligations of Purchaser hereunder, constitutes the valid and legally
binding obligation of Purchaser, enforceable in accordance with its terms.
(b) Corporate Status. Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of Illinois with full
corporate power and authority to carry on its business in the places where
such business is presently conducted.
(c) No Conflicts. The execution, delivery and performance by Purchaser of
this Agreement and the consummation of the transactions contemplated hereby, do
not conflict with or result in a violation of or a default under (i) any
Applicable Law applicable to the Purchaser or any of its assets, (ii) the
certificate of incorporation and bylaws of Purchaser or (iii) except as set
forth in Schedule 3.2(c) any Contract or other contract, agreement or other
instrument to which Purchaser is a party and by which Purchaser or
any properties or assets are bound. Except as specified in Schedule 3.2(c),
no Governmental Approval or other Consent is required to be obtained or made by
Purchaser in connection with the execution and delivery of this Agreement, the
Notes or the Transactional Documents or the consummation of the transactions
contemplated thereby.
(d) Financial Statements. Purchaser has delivered to Seller a compiled
financial statement for each of the past three fiscal years and unaudited
interim financial statements for the last two quarters (the "Purchaser's
Financial Statements"), which fairly represent the financial condition of its
business as of the dates thereof. For so long as any of the Notes remain
outstanding, within ninety (90) business days after the close of Purchaser's
fiscal year, and within fifteen (15) days of the close of Purchaser's fiscal
quarter, Purchaser shall deliver an audited (if available) balance sheet,
statement of profit and loss and income statement to Seller. The accuracy of
such financial statements shall be certified by the chief financial officer or
president of Purchaser.
(e) Taxes. Purchaser has duly and timely filed all tax returns affecting
its business with respect to taxes required to be filed on or before the Closing
Date. Except for taxes set forth on Schedule 3.2(e), which are being contested
in good faith and by appropriate proceedings, all taxes have been duly and
timely paid. All taxes required to be withheld by or on behalf of Purchaser in
connection with amounts paid or owing to any employee, independent contractor,
creditor or other party with respect to its business have been withheld, and
such withheld taxes have been duly and timely paid to the proper Governmental
Authorities or set aside in accounts for such purpose.
(f) Absence of Changes. Since June 30, 1997, Purchaser has conducted its
business only in the ordinary course consistent with prior practice and no
material adverse change has occurred in Purchaser's business since June 30,1997.
(g) Litigation. To the best of Purchaser's knowledge, after due inquiry,
there is no action, claim, demand, suit, proceeding, arbitration, grievance,
citation, summons, subpoena, inquiry or investigation of any nature, civil,
criminal, regulatory or otherwise, in law or in equity pending or threatened
against Purchaser, its assets or business or the transactions contemplated by
this Agreement.
(h) Insurance. Purchaser has in full force and effect any and all policies
of insurance as are necessary or customary for its business. The insurance
coverage provided by such policies is adequate and customary for its business.
(i) No Material Omissions or Misstatements. To the best of Purchaser's
knowledge, after due inquiry, there are no material misstatements or omissions
of material fact in connection with the Letter of Intent executed by Seller and
Purchaser, this Agreement or any of the transactions contemplated hereby or
thereby.
(j) Bring Down. All of the representations and warranties of Purchaser are
made as of the date of this Agreement, and as of the Closing Date.
4. Indemnification.
4.1 By Seller. Seller agrees to indemnify against all losses, actions,
suits, claims or proceedings (including attorneys fees) that may be incurred by
the Purchaser arising out of any breach by Seller or any of Seller's
representations warranties, covenants or agreements made in this Agreement, the
Schedules attached hereto or any document or instrument delivered in connection
with the transactions contemplated hereby. Seller also agrees to indemnify
Purchaser against all losses, actions, suits, claims or proceedings (including
attorneys fees) that may be incurred by the Purchaser arising out of a products
liability claim for any products Completed prior to the Closing Date.
4.2 By Purchaser. Purchaser agrees to indemnify against all losses,
actions, suits, claims or proceedings (including attorneys fees) that may be
incurred by the Seller arising out of any breach by Purchaser or any of
Purchaser's representations warranties, covenants or agreements made in this
Agreement, the Schedules attached hereto or any document or instrument delivered
in connection with the transactions contemplated hereby. Purchaser also agrees
to indemnify Seller against all losses, actions, suits, claims or proceedings
(including attorneys fees) that may be incurred by the Seller arising out of a
products liability claim for any products Completed after the Closing Date.
4.3 Notice and Defense of Claims. A party claiming indemnification under
this Section 4 (the "Asserting Party") must promptly notify in writing the party
from which indemnification is sought (the "Defending Party") of the nature and
basis of such claim for indemnification. If such claim relates to a claim,
litigation or other action by a third party against the Asserting Party, or any
fixed or contingent liability to a third party (a "Third Party Claim"), the
Defending Party may elect to assume the defense of the Third Party claim at its
own expense with counsel selected by the Defending Party. The Defending Party
may not assume the defense if the named parties to the Third Party Claim
(including any impleaded parties) include both the Defending Party and the
Asserting Party and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them, in
which case the Asserting Party shall have the obligation to employ its own
counsel, at its own cost. If the Defending Party assumes the defense of the
Third Party Claim, the Defending Party shall be liable for any fees and expenses
of counsel for the Defending party incurred thereafter in connection with the
Third Party Claim (except in the case of actual or potential differing
interests, as provided in the preceding sentence). If the Defending Party shall
have the right to assume the defense of and settle the Third Party Claim (at
the Defending Party's expense), unless the Defending Party shall notify the
Asserting Party in writing within five (5) days after receipt of such notice of
intention to settle the Defending Party's election to assume (at its expense)
the defense of the Third Party Claim and promptly thereafter takes appropriate
action to implement such defense. The Asserting Party and the Defending shall
use all reasonable efforts to cooperate fully with respect to the defense of any
claim, action or proceeding covered by this Section 4.
4.4 Remedies. Except as otherwise provided herein, none of the remedies
provided in this Agreement for either party, including specific performance,
are the exclusive remedy of either party for a breach of this Agreement.
Except as otherwise provided herein, the parties shall have the right to seek
any other remedy in law or equity in lieu of or in addition to any remedies
provided in this Agreement, including an action for damages for breach of
contract.
5. Brokers.
5.1 For Seller. Seller represents and warrants that except as set forth on
Schedule 5.1 hereof, it has not engaged any broker or finder or incurred any
liability for brokerage fees, commissions or finder's fees in connection with
the transactions contemplated by this Agreement. Seller agrees to indemnify and
hold harmless the Purchaser against any claims or liabilities asserted against
it by any person acting or claiming to act as a broker or finder on behalf of
Seller.
5.2 For the Purchaser. The Purchaser represents and warrants that it has
not engaged any broker or finder or incurred any liability for brokerage fees,
commissions or finder's fees in connection with the transactions contemplated
by this Agreement. The Purchaser agrees to indemnify and hold harmless Seller
against any claims or liabilities asserted against it by any person acting or
claiming to act as a broker or finder on behalf of the Purchaser.
6. Definition of Certain Terms.
The terms defined in this Section 6, whenever used in this Agreement
(including in the Schedules), shall have the respective meanings indicated below
for all purposes of this Agreement. All references herein to a Section are to
a Section or Schedule of or to this Agreement, unless otherwise indicated.
"Agreement" means this Asset Purchase Agreement, including the Schedules
hereto.
"Applicable Law" means all applicable provisions of all (i) constitutions,
treaties, statutes, laws (including the common law), rules, regulations,
ordinances, codes or orders of any Governmental Authority (ii) Governmental
Approvals and (iii) orders, decisions, injunctions, judgments, awards and
decrees of or agreements with any Governmental Authority.
"Assets" is defined in Section 1.1.
"Assumed Liabilities" is defined in Section 1.3.
"Business" shall mean the L.A.B. Division of Mechanical Technology
Incorporated.
"Business Day" shall mean a day other than a Saturday, Sunday or other day
on which commercial banks in New York are authorized or required to close.
"Code" means the Internal Revenue Code of 1986, as amended.
"Completed" means the earlier of a) the date on which all work called for in
a contract has been completed, b) the date on which all of the work to be
done at the site has been completed if a contract calls for work at more
than one site, or c) the date on which the part of work done at a job site
has been put to its intended use by any person or organization other than
another contractor or subcontractor working on the same project. A product
shall not be considered completed if it is not covered by Seller's Products
-Completed Operations Hazard Insurance.
"Consent" means any consent, approval, authorization, waiver, permit, grant,
franchise, concession, agreement, license, exemption or order of,
registration, certificate, declaration or filing with, or report or notice
to, any Person, including, but not limited to, any Governmental Authority.
"Closing Date" is defined in Section 2.1.
"$ or dollars" means lawful money in the United States.
"Excluded Assets" is defined in Section 1.1.
"Excluded Liabilities" is defined in Section 1.4.
"Governmental Approval" means any Consent of, with, from or to any
Governmental Authority.
"Governmental Authority" means any nation or government, any state or other
political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government, including, without limitation, any government
authority, agency, department, board, commission or instrumentality of the
United States, any State of the United States or any political subdivision
thereof, and any tribunal or arbitrator(s) of competent jurisdiction, and
any self-regulatory organization.
"IRS" means the Internal Revenue Service.
"Knowledge" means actual knowledge after due inquiry and investigation.
"Lien" means any mortgage, pledge, hypothecation, security interest,
encumbrance, lease, sublease, license or easement.
"Net Tangible Assets" means accounts receivable plus inventory (including
work-in-process and raw materials) less assumed liabilities.
"Permitted Liens" means Liens for taxes not yet due and payable or which are
being contested in good faith and by appropriate proceedings if adequate
reserves with respect thereto are maintained on Seller's books in
accordance with GAAP.
"Person" means any natural person, firm, partnership, association,
corporation, company, trust, business trust, Governmental Authority or
other entity.
7. Miscellaneous.
7.1 Expenses. Except as otherwise expressly provided herein, the Purchaser
and Seller shall each pay their own expenses in connection with this Agreement
and the transactions contemplated hereby.
7.2 Severability. If any provision of this Agreement, including any phrase,
sentence, clause, Section or subsection is inoperative or unenforceable for any
reason, such circumstances shall not have the effect of rendering the provision
in question inoperative or unenforceable in any other case or circumstance, or
of rendering any other provision or provisions herein contained invalid,
inoperative, or unenforceable to any extent whatsoever.
7.3 Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if (a) delivered
personally, (b) mailed by first-class, registered or certified mail, return
receipt requested, postage prepaid, or (c) sent by next-day or overnight
mail or delivery:
(i) if to the Purchaser to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
▇▇▇▇▇▇ Machine Co.
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇ & Bloomberg, Ltd.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
and:
DeGraff, Foy, ▇▇▇▇-▇▇▇▇▇▇ & ▇▇▇▇. ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
(ii) if to Seller:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
President
Mechanical Technology Incorporated
▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
or, in each case, at such other address as may be specified in writing to the
other parties hereto.
Such notices or other communications shall be deemed received (a) on the
date delivered, if delivered personally, (b) three business days after being
deposited with the U.S. Post Office, if sent by registered or certified mail,
or (c) on the next business day, if sent by Federal Express or similar overnight
courier.
7.4 Entire Agreement. This Agreement including the Schedules and the Other
Agreements (when executed and delivered) constitute the entire agreement and
supersede all prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof.
7.5 Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed an original and all of which shall together
constitute one and the same instrument.
7.6 Governing Law, etc. This Agreement shall be governed in all respects,
including as to validity, interpretation and effect, by the internal laws of the
State of New York without giving effect to the conflict of laws rules thereof.
The Purchaser and the Seller hereby irrevocably submit to the jurisdiction of
the courts of the state of New York and the Federal courts of the United States
of America located in the State of New York in respect of the interpretation and
enforcement of the provisions of this Agreement and of the documents referred
to in this Agreement, and hereby waive, and agree not to assert, as a defense
in any action, suit or proceeding that such action, suit or proceeding may not
be brought or is not maintainable in said courts or that the venue thereof may
not be appropriate or that this Agreement or any of such document may not be
enforced in or by said courts, and the parties hereto irrevocably agree that all
claims with respect to such action or proceeding shall be heard and determined
in such a New York or Federal court. The Purchaser and the Seller hereby
consent to and grant any such court jurisdiction over the person of such parties
and over the subject matter of any such dispute and agree that mailing of
process or other papers in connection with any such action or proceeding in the
manner provided in Section 7.3 or in such other manner as may be permitted by
law, shall be valid and sufficient service thereof.
7.7 Binding Effect. This Agreement shall be binding upon an inure to the
benefit of the parties hereto and their respect heirs, successors and permitted
assigns.
7.8 No Third Party Beneficiaries. Nothing in this Agreement shall confer
any rights upon any person or entity other than the parties hereto and their
respective heirs, successors and permitted assigns.
7.9 Assignment. This Agreement is non-assignable and non-transferrable.
Notwithstanding the foregoing, Purchaser may assign this Agreement and the
Transactional Documents to an Illinois corporation that is a wholly owned
subsidiary of Purchaser ("Subsidiary"), upon the prior written consent of
Seller, which consent will be granted if a) Subsidiary is sufficiently
capitalized to carry on the operations of the Business; b) Seller remains
fully liable for all representations, warranties and indemnifications, as set
forth in sections 3.2, 4 and 5 of this Agreement; c) Purchaser agrees to
guarantee the obligations of Subsidiary (subordinate to the lien of Old Kent
Bank as set forth herein) pursuant to the $400,000 and $250,000 Promissory Note;
d) Purchaser agrees that a blanket lien on all of its assets and all assets of
Subsidiary will remain as security for the $400,000 Promissory Note and the
$250,000 Promissory Note; e) Purchaser will take all action necessary or
desirable to perfect Seller's lien on assets of Purchaser and Subsidiary; and
f) Subsidiary agrees to reaffirm all representations and warranties set forth
in this Agreement with respect to itself as of the date of the assignment.
7.10 Amendment; Waivers, etc. No amendment, modification or discharge of
this Agreement, and no waiver hereunder, shall be valid or binding unless set
forth in writing and duly executed by the party against whom enforcement of the
amendment, modification, discharge or waiver is sought. Any such waiver shall
constitute a waiver only with respect to the specific matter described in such
writing and shall in no way impair the rights of the party granting such waiver
in any other respect or at any other time. Neither the waiver by any of the
parties hereto of a breach of or a default under any of the provisions of this
Agreement, nor the failure by any of the parties, on one or more occasions, to
enforce any of the provisions of this Agreement or to exercise any right or
privilege hereunder, shall be construed as a waiver of any other breach or
default of a similar nature, or as a waiver of any of such provisions, rights
or privileges hereunder. The rights or remedies that any party may otherwise
have at law or in equity.
IN WITNESS WHEREOF, the parties have executed the foregoing documents as of
the date and year first above written.
MECHANICAL TECHNOLOGY INCORPORATED
(a New York corporation)
By: \s\ ▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
Chief Financial Officer
▇▇▇▇▇▇ MACHINE COMPANY
(an Illinois corporation)
By: \s\ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
___________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
SCHEDULE 1.1
SCHEDULE OF EXCLUDED ASSETS
1. Option Agreement entered into between Finger Lakes Realty and Mechanical
Technology Incorporated dated July 1, 1985 and amended thereafter by letter
agreements dated November 16, 1989 and June 30, 1995. Please find attached
hereto as exhibit A a photocopy of the original Lease Agreement which contains
the abovementioned Option Agreement and the amendments thereto.
2. Any accrued or accruing bonuses due to all employees of the L.A.B. division,
whether previously or presently employed.
3. All funds contained in the "▇▇▇▇▇ Cash Fund" of the L.A.B. division as of
September 30, 1997.
SCHEDULE 1.8
See Attached Schedule of Accounts Receivable 90 Days Past Due as of 9/26/97.
SCHEDULE OF ACCOUNTS RECEIVABLE 90 DAYS PAST DUE AS OF 9/26/97
L.A.B. Division
Accounts Receivable Balance
September 30, 1997
Customer Customer Invoice Project Invoice Invoice Current Over Over Over Over
Number Name Date Number Number Amount 30 Days 60 Days 90 Days 120 Days
10562 ▇▇▇▇▇▇ Care Systems 09/25/97 #34898 567-00457 $625.00 $625.00
10574 Aircraft Braking Systems09/02/97 #34883 567-00424 120.00 120.00
10747 Flightline Electronics 09/04/97 #34879 567-00430 734.20 734.20
10747 Flightline Electronics 09/30/97 #34908 567-00463 174.02 174.02
10838 ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ 09/24/97 #34904 567-00454 94.14 94.14
11040 Systemes Industries 06/10/97 #11576 567-00325 12,409.00 $12,409.00
11040 Systemes Industries 06/12/97 #24963 567-00329 18,620.00 18,620.00
11040 Systemes Industries 06/27/97 #24970 567-00347 6,988.00 6,988.00
11040 Systemes Industries 09/10/97 #34893 567-00438 40.00 40.00
11101 Vibration Maint Service 07/15/97 #34849 567-00375 618.00 $618.00
11101 Vibration Maint Service 08/05/97 #34865 567-00398 1,030.00 $1,030.00
11329 Latin American Paper 09/29/97 #34895 567-00461 4,265.00 4,265.00
11330 Neltronics Ltd 09/09/97 #34892 567-00436 60.00 60.00
11333 Medtronics 09/04/97 #34887 567-00431 388.00 388.00
11353 ▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ 08/28/97 #34873 567-00423 2,377.26 2,377.26
11375 Trio Tech International 06/30/97 #34819 567-00353 2,650.00 2,650.00
11375 Trio Tech International 07/07/97 #34840 567-00366 450.00 450.00
11375 Trio Tech International 08/19/97 #34872 567-00413 860.00 860.00
11435 Clemson University 09/10/97 #34894 567-00439 64.00 64.00
11496 Data General Corp. 09/19/97 #33713 567-00448 3,767.87 3,767.87
11637 Monsanto Company 08/26/97 #34877 567-00419 49.99 49.99
11767 Frigidaire 09/09/97 #34889 567-00435 75.08 75.08
11947 Jefferson Smurfit 08/19/97 #31214 567-00410 29,800.00 29,800.00
11959 Spartan Bookstore 08/29/97 #34884 567-00427 331.50 331.50
11970 Mitsubishi Electronics 09/25/97 #29056 567-00441 74,110.00 74,110.00
11998 Kruger, Inc. 08/27/97 #33711 567-00426 2,143.63 2,143.63
12040 Commun Instrumentation 09/03/97 #34882 567-00429 550.00 550.00
12140 Acousticom 08/05/97 #33707 567-00402 1,387.24 1,387.24
12174 Rosemount Analytical 08/27/97 #34876 567-00422 755.00 755.00
12227 ▇'▇▇▇▇▇▇▇▇ Industries 09/19/97 #27143 567-00449 23,950.00 23,950.00
12309 United Defense 09/09/97 #27142 567-00433 13,900.00 13,900.00
12363 Power Conversions 09/19/97 #34845 567-00450 680.00 680.00
12395 ALHU International 08/20/97 #31217 567-00414 18,696.60 18,696.60
12478 Hewlett Packard 09/24/97 #34902 567-00453 134.00 134.00
12483 AgrEvo USA 08/06/97 #33708 567-00403 1,770.00 1,770.00
12483 AgrEvo USA 08/12/97 #34874 567-00404 62.65 62.65
▇▇▇▇▇ ▇▇▇▇▇ Corporation 08/28/97 #29053 567-00420 18,625.00 18,625.00
12630 Spectral Technology 09/22/97 #34886 567-00451 900.00 900.00
12696 Nestle Frozen Foods 09/11/97 #34890 567-00442 61.75 61.75
12746 Allied Signal 09/30/97 #34907 567-00462 800.75 800.75
12789 Pepsi 09/19/97 #34899 567-00447 260.00 260.00
▇▇▇▇▇ ▇▇▇▇▇▇▇ Pacific 09/30/97 #39592 567-00464 1,962.50 1,962.50
12809 Revcor 09/11/97 #34888 567-00443 366.75 366.75
12820 AMP, Inc. 09/03/97 #34867 567-00428 2,723.02 2,723.02
▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ 08/27/97 #33712 567-00425 900.00 900.00
12885 Delphi Thermal 08/14/97 #33710 567-00408 1,169.70 1,169.70
▇▇▇▇▇ ▇▇▇▇▇▇ Products 09/24/97 #34901 567-00446 420.00 420.00
13028 Zotos Corporation 02/26/97 #24954 567-00213 6,980.00 $6,980.00
13028 Zotos Corporation 02/26/97 #29016 567-00214 5,075.00 5,075.00
13037 ▇▇▇▇▇▇▇▇ Standard 06/02/97 #24966 567-00314 11,835.00 11,835.00
13037 ▇▇▇▇▇▇▇▇ Standard 07/03/97 #24966 567-00365 67.61 67.61
13055 Tira GMBH 07/03/97 #29046 567-00360 4,735.15 4,735.15
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ General 03/11/97 #29021 567-00192 5,829.00 5,829.00
13086 Philips Electronics 09/15/97 #29054 567-00444 28,000.00 28,000.00
13100 Proxitron AB 04/01/97 #29022 567-00195 1,149.10 1,149.10
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ 06/17/97 #34834 567-00332 750.00 750.00
13142 Lease Advisors 06/06/97 #29033 567-00318 2,600.79 2,600.79
13142 Lease Advisors 08/19/97 #20951 567-00411 17,484.56 17,484.56
13155 Orsam Sylvania 09/23/97 #34903 567-00452 77.23 77.23
13161 ▇▇▇▇ International 07/25/97 #39588 567-00386 2,000.00 2,000.00
13167 GEC Marconi 07/30/97 #34868 567-00394 169.00 169.00
▇▇▇▇▇ ▇▇▇▇▇▇ ▇&▇ 09/05/97 #29059 567-00432 28,475.00 28,475.00
▇▇▇▇▇ ▇▇▇▇▇▇ ▇&▇ 09/22/97 #24974 567-00460 12,590.00 12,590.00
▇▇▇▇▇ ▇▇▇▇▇▇ ▇&▇ 09/30/97 #29059 567-00466 483.58 483.58
▇▇▇▇▇ ▇▇▇▇▇▇ ▇&▇ 09/30/97 #24974 567-00468 130.63 130.63
13183 PSI, Inc. 09/12/97 #24972 567-00434 12,325.00 12,325.00
13184 Qualcomm 09/10/97 #29062 567-00437 5,683.81 5,683.81
13184 Qualcomm 09/30/97 #29062 567-00467 158.55 158.55
13189 Northrop Grumman 09/15/97 #34897 567-00445 120.00 120.00
13195 Air Packaging Tech 09/26/97 #29060 567-00458 10,225.00 10,225.00
13195 Air Packaging Tech 09/26/97 #24975 567-00459 18,435.00 18,435.00
▇▇▇▇▇ ▇▇▇▇▇▇▇ Packaging 09/30/97 #33709 567-00465 14,536.14 14,536.14
---------- ---------- ---------- ---------- ---------- ----------
Balance @ September 30, 1997 $442,907.37$262,466.02 $97,443.13 $8,039.76 $55,852.79 $19,105.67
========== ========== ========== ========== ========== ==========
SCHEDULE 3.1(c)
SCHEDULE OF SELLER'S CONTRACTS, AGREEMENTS OR INSTRUMENTS
WHICH CONFLICT WITH THE ASSET PURCHASE AGREEMENT; SCHEDULE OF
GOVERNMENTAL APPROVALS OR OTHER CONSENTS REQUIRED TO BE MADE
BY SELLER IN CONNECTION WITH THE EXECUTION AND DELIVERY OF THE
ASSET PURCHASE AGREEMENT
Conflicting contracts, agreements or instruments
1. Lease Agreement dated July 1, 1985 and all amendments thereto (attached
as exhibit "A").
2. Master Lease agreement (attached as exhibit "B") between MTI and Tokai
Financial Services, Inc. dated May 22, 1995, for one telephone system.
3. Lease Agreement between Pitney ▇▇▇▇▇ Credit Corporation and MTI for one
postage meter and one mail machine (attached as exhibit "C").
SCHEDULE 3.1(d)
PRELIMINARY CONTRIBUTED BALANCE SHEET
EXHIBIT B
L.A.B. Division
Contributed Balance Sheet (estimate)*
September 30, 1997
(dollars in thousands)
ASSETS
August 1997 Adjustments Contributed
(estimate)
----------------------------------------------------------
Cash 2 (2) 0
Accounts
Receivable-Net 537 11 548
Inventory 433 0 433
PrePaid Expenses 1 7 8
----------------------------------------------------------
Total Current
Assets 973 16 989
Goodwill &
Intangibles 41 (41) 0
Other Assets 0 0 0
Property, Plant &
Equipment-Begin
Year 1,025 0 1,025
Current Year
Disposals 9 0 9
Current Year
Capital
Expenditures 60 0 60
Accumulated
Depreciation 984 0 984
---------------------------------------------------------
Net Property,Plant
& Equipment 92 0 92
---------------------------------------------------------
Total Assets 1,106 (25) 1,081
=========================================================
LIABILITIES & EQUITY
Accounts Payable &
Accrued Expenses 278 (29) 249
Current Maturities
on Long-Term Debt 0 0 0
Income Taxes
Payable 0 0 0
---------------------------------------------------------
Total Current
Liabilities 278 (29) 249
Other Liabilities 0 0 0
InterCompany
Account-Beginning
of Year (4,200) 4,200 0
Current Year
InterCompany
Activity (90) 90 0
Retained Earnings-
Beginning of Year 4,740 (4,740) 0
Current Year Net
Profit after Tax 378 (378) 0
Current Year
Translation
Adjustment 0 0 0
---------------------------------------------------------
Total Liabilities
and Equity 1,106 (857) 249
=========================================================
Total Net Assets
Contributed 832
===============
* The Contributed Balance Sheet estimate is based upon the actual August 1997
Balance Sheet. The actual Contributed Balance Sheet will be subject to
activity during the month of September 1997.
SCHEDULE 3.1(e)
SCHEDULE OF TAXES BEING CONTESTED BY SELLER IN GOOD FAITH
None.
SCHEDULE 3.1(h)
MATERIAL CONTRACTS OF SELLER, INCLUDING INSURANCE POLICIES
1. Lease agreement, between Finger Lakes Realty and Mechanical Technology
Incorporated dated July 1, 1985, and all amendments thereto.
2. Master Lease agreement between Mechanical Technology Incorporated and
Tokai Financial Services, Inc. dated May 22, 1995, for one telephone system.
3. Lease Agreement between Pitney ▇▇▇▇▇ Corporation and Mechanical Technology
Incorporated for one Postage Meter.
4. Lease Agreement between IKON Capital and Mechanical Technology Incorporated
for one copier and sorter.
5. Insurance policies issued by ▇▇▇▇▇▇▇▇ & Sterling Upsate Inc. maintained by
Mechanical Technology Incorporated:
a. Directors & Officers Liability
b. Excess Directors & Officers Liability
c. Property & General Liability
d. Air Craft Products Liability
e. Workers Compensation
f. Commercial Umbrella
g. ERISA Bond
h. Commercial Crime Policy
i. Commercial Auto
j. California Tax Bond
k. Open Cargo Policy
SCHEDULE 3.1(i)
SCHEDULE OF LEASES OF SELLER
See Schedule 3.1(h)(1) through 3.1(h)(4) above.
SCHEDULE 5.1
SCHEDULE OF BROKER ARRANGEMENTS AND AGREEMENTS ENTERED INTO
BY SELLER
1. MTI is a party to a broker agreement with First Albany Corp. whereby MTI
will pay First Albany $75,000.00 plus expenses for services rendered in the
process of finding a suitable purchaser for the L.A.B. division.